UAE money supply accelerates

Money supply growth in the UAE accelerated in the first quarter as investors put more funds in interest-bearing bank deposits, central bank data showed on Thursday.
M2, which measures notes and coins circulating in the economy and cash in bank deposits, grew 25.9% in the 12 months to March 31, compared with 23.2% in the year to end December.
The pace of growth month-on-month picked up through the quarter, rising to 5.6% in March from 1.4% in January.
Quasi-money, which measures cash in bank accounts other than demand deposits, was the main driver of growth.
Foreign currency deposits increased 36.7% in the year to March 31 and dirham deposits rose 29.2%.
"The move away from demand deposits reflects the increase in interest rates compared with previous year," said Giyas Gokkent, head of research at National Bank of Abu Dhabi (NBAD).
The UAE central bank tracks interest-rates moves in the US to maintain the relative yield on the dirham, which is pegged to the US dollar.
The US Federal Reserve raised its benchmark rate by a total of one percentage point in 2006. Source